In Defense of Selling Out | Hacker News Reader

In Defense of Selling Out

bijansabet.com

44 pointscsmajorfive18 comments

I sold my first company in 1999. We had a rapidly growing online catalog of business phone systems and related products and service (PhoneZone).

In late 1998, we got a term sheet from a well known VC. The terms were ok, except it was clear they wanted to replace me with a "seasoned" CEO, who I expected would push us aside and build a top heavy organization. At the same time, I had a chance meeting with the founder of Hello Direct, a successful and public catalog retailer of similar products. We got an offer to sell in the low millions.

Chump change right? It was pretty clear by then the dot com bubble was out of control and that things were going to end badly. I decided it was better to take some money off the table and join HD, since they'd probably do just fine.

Turned out to be a good decision. I was able to buy a house, and got through the crash just fine. If we had tried to go all the way, I am 99% sure we'd have burned through our funding and crashed and burned in 2000, and ended up with nothing.

Like anything in life, whether to sell or not depends on the situation. In retrospect, I wish I could have kept PhoneZone as an independent company. It would have been a great business long term, but I don't think it was in the cards due to forces beyond our control. So no regrets.

For a lot of people, the thrill is the creation, not the maintenance.

I don't blame anyone for selling, even if they just want to do something less interesting, or nothing at all. Elon & Bill are great examples of good reasons to sell, but so is virtually everyone who ever sold a company.

If the money and freedom is compelling enough to do it, by all means, do it.

Sell out: "To abandon one's supporters or principles to seek profit or other personal advantage."

There's a difference between "selling" and "selling out". Selling your company does not mean necessarily mean "selling out". New ownership often means new control, new principles, new directions, often driven by pure money-motive, it isn't always. Berkshire Hathaway is famously hands-off with its acquisitions, for example.

Semantically you could make the opposite argument however given the perspective/context.

Abandon can mean relinquishing of control. It would depend on your employees/clients, but given a large enough sample size, I'm sure one party might feel cheated when power changes hands.

That said, ownership gives you that power. The power to relinquish it. It seems perfectly ethical/moral to me.

People who use the term "selling out" don't believe in the term-sheet definition of ownership. Those people use words like "commmunity", "stakeholder", and "contributor", and attach important meaning to them.

The world is not a perfectly efficient free market of isolated transactions.

That's nice, but the problem is that "selling out" has strong pejorative connotations, while being completely vague.

Does Bill Gates have a positive moral duty to all those "stakeholders" employed at MS, until the day he is carted onto his deathbed? Obviously not. What would that duty actually mean in concrete terms? I have no idea. In fact, at some point, trying to hold on and control the company is in the disinterest of stakeholders, as Gates' personal interest and abilities wane.

TFA is pretty vague too. I do not sell anything particularly wrong with selling a company at 10% of what you could have gotten several years later. A "measly" 2-3 million dollars in a bank account buys you a lot of freedom. Diminishing marginal returns means that another 10 or 20 or even 30 million buys you less happiness than you might think.

While your distinction is a useful one, I think it's not a common one. Just as there seems to be some sort of cultural rush to be the first to declare something has jumped the shark, there's a very strong presumption that selling simply is selling out, a conclusion that can be leaped to without anything so tedious as examining the facts, and some sort of rush to be the first and loudest to so declare.

It could be that I discuss in odd circles, but the distinction between the two seems pretty commonly raised in my experience. Common to the extent that arguing over which side of the dividing line a particular sale falls is the key question often debated. The "con" side will argue that a given sale is not only a sale in the literal sense, but selling out in the more ethical sense of failing to do right by one's fans/customers/whatever, letting the cash being dangled lure you into doing something you wouldn't normally do. For example, when CDDB "sold out" to Gracenote, which took it proprietary, the problem wasn't just that CDDB sold at all, but that the trustees of a community project sold out their community's trust for a cash payment.

The "pro" side will typically argue that a given sale is just changing ownership structure but not fundamentally auctioning off their values/trust/etc.

For most us, the Holy Grail is to reach a point where you're financially independent. Once you reach that point, almost anything is possible: you can devote your creative energy to producing your vision, instead of wasting it in a 9 to 5.

Attaining that billion dollars (which isn't assured) isn't so desirable or important anymore once you reach this point.

What do we consider going all the way? Permanent employment at ones startup? Ipo? I think for many entrepreneurs who sell there are a ton of factors (short term financial, boredom, new ideas they prefer to pursue, life changes, etc). If you are a serial entrepreneur at heart, you have to sell, otherwise you will feel trapped forever.

So weird. I really don't get why any human would disagree with what Gates is doing.

Especially since he retired 10ish years ago, so why should he bet his dreams on something he doesn't control anymore?

The logic is also based on the the idea of an equal trajectory for the company regardless on management.

The landscape is too uncertain to ever know if you could have achieved the same level of success. It's a what if scenario, a sunk cost and out of your control the moment it happens.

It's two different scenarios so you always have the nagging question in mind if you could have done it on your own.

"I didn't sell out son. I bought in."

Reminded me of http://paulgraham.com/prcmc.html, which equates selling your company to hiring someone else to manage it full time. Otherwise you wouldn't be able to focus on anything else.

"Last week I read Bill Gates will have sold all of his Microsoft stock by the year 2018 through a series of planned transactions that began many moons ago. I was dismayed by this. Why would he sell all of his stock?"

I don't know why smart people keep repeating this over and over again. Who says Bill has to sell all of his stock? His stock selling schedule does not go to 2018. Yes, if he continues to sell at the current rate through 2018 all of his stock will be gone, but that's an unrealistic extrapolation. Gates has never said he plans to sell all of his stock by X date. He holds $63 billion outside of Microsoft. I'd argue it's at least as likely that Gates will hold onto a multi-billion dollar stake, and that his goal is to limit risk by not having such a singular large position in any one investment. His goal being to maximize the amount of money he can put to use in the foundation, and minimize the chance of a big portfolio loss.

It's also worth noting that by 2018, he will have been sitting on that stock for roughly 43 years! That's an extraordinary length of time for a founder or any owner of any stock to hold.

The classic 43 year pump and dump, we should have seen it coming.

The purpose of selling is that you can just build whatever you want and increase your impact by having your hands in many things.

That´s what we are all in for, right?

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